British Airways upbeat despite $256m loss

London, July 31, 2010

British Airways still expects to break even in the full year, despite reporting wider first-quarter losses due to the impact of volcanic ash and strike-related disruption.

The British carrier's pre-tax loss grew 10.8 per cent to GBP164 million ($256.4 million) for the three months to the end of June, while revenues fell 2.3 per cent to GBP1.93 billion.

However, BA's yields - the revenue it makes on each passenger for every mile travelled - rose 12.7 per cent as costs fell and it maintained previous full-year guidance.

"While some economic experts are flagging the risk of a double-dip recession, the steady recovery continues and, on that basis, we continue to target to break even at a profit before tax level for the full year," BA chief executive Willie Walsh was quoted as saying in our sister newspaper, the Gulf Daily News.

Shares in BA, which has lost around GBP1 billion in the last two years, were 2.9 per cent up at 222.5 pence, valuing the business at around GBP2.5 billion.

"The underlying revenue trends, control over non-fuel costs and recent good news on the strategic issues (Iberia and American Airlines) continue to suggest that BA shares have turned a corner into a more positive phase," said Societe Generale analyst Jonathan Wober.

EADS, the parent company of European planemaker Airbus, yesterday said it boosted its revenue and commercial airplane forecasts, adding to signs that the sector is back of its feet after a deep two-year industry downturn.

The Unite union, which represents BA cabin crew, has been embroiled in a long running dispute with the airline, which has resulted in a series of strikes costing BA GBP150 million.

It was also hit by the spread of ash from an erupting volcano in Iceland, which grounded much of Europe's air traffic for a week in April, and cost the airline around GBP100 million.

BA, whose merger with Spain's Iberia was unconditionally cleared by the European Commission, said passenger revenue fell 3.4 per cent in the period but that without any disruption it would have jumped 11 per cent.

The British carrier also won EU antitrust clearance to deepen its pact with American Airlines after agreeing to cede some lucrative trans-Atlantic routes.

"We can now sit down with American and share commercial information that we previously couldn't, so that is ongoing," said Walsh.

"We will be developing and refining plans on the basis of that shared information over next couple of months." – TradeArabia News Service